Music Subscription Service – The Winning Consumer Model IMHO

I recently blogged about the fact that I was looking at my options for what music device and service would be my next purchase. The sexiest devices are clearly from Apple now – but the business model is the thing I don’t want.

My music collection up until 2 years ago was completely stuck in physical media. Tons of CDs and cassettes. In the past I had 8-tracks (yes, I had a few. I wish I still had my The Who, Who Are You 8-track just for the sake of a really cool collectible.), and records before that. Funny thing – I bought more than a few albums 2 or three times on different media over the years, and moreover had friends permanently borrow others that I had to repurchase.

Along comes ripping and suddenly I have the ability to drop my whole collection onto my creative labs device – that was cool. But, through all of that, I went for about 10 years without buying more than 2 or 3 albums a year compared with the dozens I purchased during college and my early 20s. As a music listener – my favorite thing about the new music services is the easy exposure to new bands based on recommendations and services that help you find new stuff. So, my interest in new music has been rekindled and I want to find new bands now, all the time. I love finding new bands I like – that is the most important feature of a music service.

So, what is the business model issue here?

As a consumer, I have been trained over decades to want to “own” my music. Which is of course really only a license to listen to that music (but that is for the copyright nerds). I don’t want anyone to have the ability to block me from my music. Right? Turns out, wrong.

The music industry is going through a pivotal point in its history. The old models are giving way to the online music services and the frightening (to the music business people) concept of limitless, persistent quality, redistribution.

The truth for me as a consumer is that I just want to have access to as much music as possible for as little cost as possible. Yet, I respect the idea of IP – and as a musician myself – really want to see continued incentive to artists to create. So, I have landed on subscription services as my favored model.

I bought a Zune 8GB device and am paying $15/month for unlimited downloads. I can experiment with unlimited abandon without paying per track for stuff that I ultimately delete from my machine. I can download stand-up comics, listen to them once and delete them. I can download speeches and other commentary – and delete them. I just wish the Zune guys would figure out audio books as well.

I found some rumors of Apple moving to a subscription service offering as well. If they do that – it would be extremely cool given the range of content on iTunes. But – the rumor that I saw was $100/month – WOW. At $15/month I will pay $180 a year to have >$2000 of content if I had bought it at $.99/track. I don’t know that would be as excited to pay $1200 for that honor.

The biggest hurdle for the consumer on the subscription service is that when you stop paying the service, the music goes away. Ok, that sucks…or does it. It just happened to me when my Urge network went belly-up and they moved me to Rhapsody. I had a bad user experience at Rhapsody, looked around, and moved to Zune. I stopped paying one service and started paying another, had to go through the pain of downloading a bunch of music again – but am now perfectly happy with my music again – and am still ahead financially.

If there were dozens of subscription services to choose from then consumers would have peace-of-mind and will get to listen to more music.

Comments (13)

  1. Barry Kelly says:

    I don’t believe you – not literally, I just don’t think you’re being honest, with either yourself or the people you think you’re talking to by blogging.

    What happens if (when) Microsoft gives up on the Zune or its music services? Do you have any guarantee that other services will even stock the same music? How about 50 years from now? Are you comfortable paying $9000 in today’s money to still be able to listen to your favourite music from this time, when you’re 50 years older?

    "But their strategy was a bad one, combining impractical copy-protection schemes with locked-down subscription services that would appeal to few if any customers."

    To be frank, I don’t think your being anything other than willfully dishonest.

  2. jasonmatusow says:

    I’m certainly not being willfully dishonest.

    Your point about the $9K assumes that I had a selection of music that I rarely change (old-world thinking about your music collection) and that I would be effectively paying a maitenance fee on it. The difference, which I hope I was clear about, is that I love the experimentation and the constant flow of new music. That would mean for my $9K I will get $40K+ of music. I love the idea of subscription solely for the purpose of constand new music downloads.

    Second, if Microsoft closes the Zune service – ok, I switch services (provided I can find another subscription) and I lose nothing. I lose nothing because I just go download my stuff again for no incremental cost.  So far, in my move from one service to another – there is only 1 band that I can’t get their stuff.

    What do you think? Seriously – I’m not trying to be dishonest – I’m just sharing my POV on this.


  3. jasonmatusow says:

    One more thing – I didn’t choose Zune because I am a MS employee. In fact, I was most drawn to Apple – without a doubt that was where I was heading.

    Zune was a non-starter for me if it wasn’t for the 8GB device. I am a mountain biker and am unwilling to carry the large format devices. I don’t give a crap about video – I want music, and I want it to be a clean, slim device with good storage. In the end, for me it was totally about the service – and the subscription. The combination of those elements is why I chose Zune. I am not completely satisfied – there are tons of improvements I hope to see. But – for now, it was the best mix.


  4. I have gone back and forth on this issue myself.  Since I am still stuck back in the physical device stage (CD’s), it is mostly a question of when I will finally get something, what will it be?  I have to admit that a subscription service sounds appealing to me.  I have old favorites that I will buy separately, but I would love to have access to all sorts of music and not worry about the individual cost.  The idea of DRM is annoying, but in this particular area, I am not sure the reality is.  After all, I pay library taxes and always vote for library levies, all so I can borrow books.  I figure there will always be another library, so I don’t feel obligated to buy every book I read, although I do buy the ones I want to be sure to have forever.  The same basic approach makes sense to me with music.

  5. Sally says:

    Dear Jason,

    This is a HUGE issue for me.  I have been very slow to change music formats, and this "historic" change in the music industry is very problematic for me.  I just got rid of my cassettes last year – I had been migrating towards cd’s, but still haven’t replaced all "MY" music with cd’s yet because of all the format changes that have happened since I was making mix tapes back in the day.  

    I don’t know if it’s the fact that I’m a skinflint, or a 30-something mom, but I don’t have the time nor the inclination to keep downloading music whenever I change a subscription service – where can you keep a "list"?  I’m not a in a very attractive demographic to begin with from the Music Industry’s perspective.  As far as they’re concerned, I’ve already set my tastes, and will just be working towards a library, in effect.  But, emotionally, I want to hear new music, I want to find out about new bands, etc. and the way I used to do it was Radio.  I had favorite DJ’s [e.g. Kim Alexander, WCCC, Hartford] who I could count on to spin good tunes [I’m not going to get into payola here, but let’s not forget what a huge, HUGE factor THAT was back in the day.]  Now I set up a channel at Pandora and see how the logarithm (logarhythm??) picks my music.  It’s not ideal, but deep down, I rebel at paying $15/month for a service where I don’t OWN anything at the end.  I am old-fashioned, I guess.  But in my mind, I’m not buying a $15 cd every month, so why should I pay that much for a service?

    It’s a big issue for me b/c I do love to listen to music.  And "MY" music IS stick in a time warp.  But I don’t really want to wait ’til my kids are in college to be able to have the time to go figure it out.  Good topic.

    Still struggling,


  6. jasonmatusow says:

    Ben and Sally – I totally relate. I am a busy guy, and spent more than 10 years listening to what I had on CD already (in your case Sally, on cassette.). As far as the music industry is concerned, I clearly fell into the low-revenue category. Truthfully I had forgotten how much I like to hear new music.

    I too initially rebelled at the idea of paying $15/month and not "owning" my music at the end of the day. But, then I thought about how much music I have sitting on Cassette that I NEVER listen to now because I literally don’ t own a cassette deck anymore – not in our cars, not in our kitchen, not in my livingroom, certainly not portable…So, where am I on all of those cassette purchases?

    Sally – go check out – enter in an artist you like and check out the incredible breadth of other music you should go and try out. To me, the subscription service is ideal – I get to download the full tracks, I respect the artists’ intellectual property (I don’t think stealing music is right), and I can delete the stuff I don’t like without feeling like I just threw away my money.

    If you are into experimenting with lots of new stuff – then subscription puts you way, way ahead. If you want to get 50 or 60 albums and just stop there – then subscription has to be stupid.

    Also Sally, if you liked making mixed tapes – you will love "playlists" on new devices. It is so much easier to make a great mix.



  7. Well it’s 6 am here in Kyoto, and I can’t sleep so I figured I’d provide some random thoughts for you…

    I couldn’t agree with you more on this one Jason. I’ve been preaching the subscription service to my friends for a few years now, but haven’t been too successful. 🙂

    The key things for me are:

    – I hadn’t bought more than one or two new CDs a year since college (when I had hundreds). I just didn’t have enough time to follow all the music coming out so didn’t know if I would like a new band enough to buy their album.

    – I found that I was quickly turning into old man mode, where all the music I listened to was at least 10 years old. I knew there was good stuff out there, but just didn’t feel like buying up a ton of new CDs.

    – Along came the new Napster subscription service (a few years ago), and all the sudden I could pay a flat fee and listen to anythign I wanted. If I got sick of a song, I just stopped listening to it. I had no vested interest in any particular group or song. (as Ben said it’s just like getting books at the library)

    – I’m now finding new music I never would have with the older models. If I really want to own a song I can still buy it, but I haven’t had to do that yet.

    – I just wish Apple would switch over to this model as I’d love to get an iPhone, but as you said I don’t like their "pay per song" model.


  8. Nektar says:

    I believe that people’s desire to own something is in proportion to the emotional value they attach to that thing and not to its true life importance, provided that the cost of owning are prohibitive. For example, we do not mind subscribing to a house service (it is called renting a house) or paying for our Internet access. However, the Web content has no emotional value for us or at least for the time being (might do to Bloggers).

    I believe that music, for some, falls in the more emotional category and thus they would want to own it. What is missing then from online music services are the laws of the market, namely the ability to sublicense my music rights (put them up for renting)  or to sell them to somebody else. In addition, what is missing is the ability to share and play my music on any device and on any platform, which hinders the creation of a true marketplace. Most importantly though the fact that there is a free although illegal way to own music makes owning it more desirable, since the cost of owning is not prohibitive.

    So, what is to be done:

    1. All online services should allow users to subscribe or purchase unprotected tracks.

    2. Subscription service should automatically work on every platform and every device and be seamless, otherwise its value proposition is nothing. I would rather download the songs or books or etc.

    3. Services must allow users to sell and buy songs, videos, books  and any kind of unprotected and already purchased electronic media from other users.

    4. Users must be able to rent parts of subscriptions from other users. For example, I should be able to rent (sublicense) to someone all my rock or latin or I don’t know what collection part from my subscription. That particular part would then become inaccessible to me but accessible to the one who rented it from me. For example, an Internet Service provider should be able to purchase say 10000 subscriptions from Zune, Apple, etc and sublicense them to its own subscribers as an added value to its Internet service package.

    5. There should be no DRM on purchased songs and non-commercial and non-public redistribution i.e. to friends should be allowed. This would encourage the spread of music instead of hindering it.

    6. Public redistribution e.g. on the Web, or performance should require a specific license and each file should be finger-printed to be able to procecude those who break this non-public distribution requirement. Finger-prints could be removed only after a public redistribution license is obtained.

    7. Use of parts of copyrighted works such as on Youtube videos should be allowed to encourage creative art. However, the work used should not be from the ones that where granted public redistribution rights, to prevent the massive reproduction of copyrighted works. In other words, no anonymous redistribution of parts of copyrighted works. Think of it as an extention of the need of attribution in litterary / scientific works.

    8. Web platforms should be built to enable collaborative creativity, e.g. the writing of a book, the composition of a piece of music. These communities should allow their members to public their works under any license they desire and the system should enforce this licenses, either by finger-printing works or by collecting the right fees. Everybody learns from the past and the use of copyrighted works as a basis of ideas should be allowed as far as these works are attributed and as far as they are not a mere reproduction.

    9. I have seen many collaborative development projects of computer code. These means that even works of art can be produced collaboratively if the right tools are enabled. Today the tools encourage reproduction of copyrighted works than enable creative collaborative work. The first link you see on Youtube is Upload or Download not a video editor or a site for helping you create your own videos or an easy place to exchange ideas on how to create. They are mostly on how to smuggle. The architecture does matter.

    10. Finally, tools architecture does matter. If tools and websites encourage copying then copying is what you will get. If tools, like Wikipedia, and communities encourage creativity, creativity is what you will get. Where is a creatives essay-writing site, a collaborative story-telling site like a wiki to be edited by many, where is a site were I can submit my music ideas for other to work and enhanse?

    11. People in the litterary business do not copy illegally. Why? Because they sign their name to what they do and because information is free in other books to get ideas. We all were students at some point. What if in this electronic age, everybody is made an author, a creator, a producer. Business only think of consumers but in this age, society and businesses alike have more to gain from producersconsumersproducers, people who do both, than from only consumers.

    12. Producers lose the insentive to share works, without respecting others. If you are only a consumer, if you are house is rented to you only for a year, then you might just as well destroy it, be careless or benefit personally from your "property". However, if you house is rented to you for 30 years, then you become a producer and you make it your own by creating things in it, adding things and making it personal. The renting agent benefits because he/she does not have to make repares every year and you benefit because you are happy. The same should be done to file-sharers. Be turned into producers of art by easily allowing them, by creating the right tools and services, to creatively mix song, videos and books, and make them available, to rent parts of their subscriptions if they desire, to sell their music and to have a two-way communitation with other users on every device. This is what online services should offer and then they will thrive. Companies which provide music will benefit since it is from them that those users will need to get the subscription or have to purchase the finger-printed or public licenses. They would also have the new works created by those users available to resell or resubscribe to other users if the user desires. Users will benefit and it would make it their interest to create and not to allow others to reproduce without respecting others’ rights.

    I believe that user experience i.e. tooling is key. And none of the present platforms provide creative interactions to make people more emotionally attached to the music, videos, books, etc and thus transforming from mere consumers who would want to maximize as companies their profits (taking as much as possible with the lowest price) into true owners of culture.

  9. Dave S. says:

    Altogether an interesting discussion.

    On one side is physical ownership – in this case music. It can also be magazines, books, or encyclopedias, or a car.

    On the other is ephemeral ownership, such as Sirius, Netflix, cable tv, or any other rental system, which are only yours for the time you use/pay for.

    A large part of the old physical cost was advertising and distribution.

    With the Internet both can be cut quite a bit. It’s no longer required that thousands of locations stock a CD that someone local may want. There’s also the physical cost of reproduction, which the street-corner pirates have shown is pretty low. There’s the initial production costs – which will vary depending on artist and studio, but to a large enough audience is pretty small. I’m sure there are some other costs as well, but also small in comparison.

    Same thing applies to most other physical objects, just different terminology.

    With the ephemeral is the risk that what you like won’t be available anymore. With physical posession that’s a risk also, but at least there’s the chance it will be with you when desired.

    With physical posession there is also the chance to edit out or skip materials you don’t like. With the ephemeral, only after creating a physical version (TiVo?) can you do the same.

    Jason – get with the program 🙂 – I still have a fully functioning cassette Walkman, the kind that collapses to be the size of a cassette box and runs on one AA. It’s a beautiful piece of design and manufacturing. I haven’t listened to a cassette on it in about 15 years, but the FM tuner works and the cassette drive works – no belts to fail.

  10. jasonmatusow says:

    Dave – The only thing missing from my life is a portable 8-track player. It would be compact, elegant, and stylish. 🙂

    thx all for this conversation.

    In particular, a big thanks to Nektar for such a thoughtful comment. There are many thoughts in there worthy of discussion.


  11. I think the discussion on my last posting about digital music was great. If this topic interests you,

  12. I recently blogged about the fact that I was looking at my options for what music device and service would be my next purchase. The sexiest devices are clearly from Apple now – but the business model is the thing I don’t want. My music collection up unti